The Musings of Metis

Is Brand Restoration Insurance a Good Investment?

An interesting article was posted by FT.com last week where it discussed the advantages and disadvantages of brand restoration insurance offered by AON. The full article can be found here.

We will have read recently of a number of companies who may have benefitted from such insurance: BP and Toyota for example and the insurance is all very well for larger companies who can afford the premiums but what about smaller companies? The crux of the article lies in the following paragraph:

“Brand and reputation are the sum of the investment of management time and energy in the invention, manufacture, marketing and distribution of successful products and services. Reputation management may sustain and promote your brand in good times and crisis management may help salvage some of it when they turn bad. But bosses who neglect the building blocks of their company’s success will find in a crisis that they have no reputation to defend, no matter how much insurance or advice they have bought.”

Before companies invest large sums of money in insuring their brand and reputation, they must first have brand and reputation worth protecting. This occurs through a long term commitment and through consistency in approach and if properly managed as the company’s “most valuable asset”, the need for insurance may not be needed.

Is this insurance really needed, or has it been created as a consequence of a cut-throat, win-by- any-means marketplace? Is good housekeeping the better option? Perhaps the “insurance premium” might be better spent building the brand value inside the business with employees, partners and suppliers to secure the equity? Do you agree?

Coffee to Go?

In an interesting article in a recent Financial Times, two opposite perspectives on licensing were demonstrated.

The article related to Oracle’s patent and copyright infringement claim against Google for the inclusion of elements of the Java software (now owned by Oracle after its purchase of Sun Microsystems earlier this year) within the Google Android smartphone operating system.

It appears Java has become the victim of a sea change in licensing strategy surrounding its use. When owned by Sun, Java was “promoted” as the enabler for internet applications, a tool set where developers could rapidly build solutions for an ever widening, cross platform user base. As a consequence, it is unlikely for you not to have Java somewhere on your systems if you use a PC, mobile phone or netbook. “Freely” licensed use of Java established its position as the tool of preference and core to internet business and in return Sun gained kudos.

Now, under the ownership of Oracle, Java has become embroiled in the battle for smart phone supremacy. With sales of Android-based smartphones overtaking Apple’s iPhone in the last quarter, and the inclusion of Java code in the operating system. The FT article suggests Oracle see a threat to their existing Java licence revenues whereby it would lose the power to “charge a royalty on new handsets”. As a consequence, the Java strategy has moved from collaborative to protective, with multiple copyright and patent infringement claims being raised in San Francisco.

While the outcome is yet unknown, there remains a risk that Google, if forced to pay for the use of Java, could start to charge for Android, challenging Google’s Android business model and new handset providers may look for cheaper alternatives or open up the opportunity for Apple to regain the initiative or another player (Microsoft?) to enter the arena.

As the article states: “at the time it bought Sun, Oracle executives said they would tread carefully in how they exercised their Java rights, since a heavy-handed approach could undermine the software’s standing as a de facto industry standard”, but has the temptation of new revenues as a result of the growth of mobile apps been too great?

The bottom line is this: when you establish a patent portfolio, you must seriously consider how you intend to utilise it. Do you intend to actively pursue each infringement or do you view a collaborative approach to be more attractive, sharing profit through a well thought out licencing strategy?

Is Java now both a headache as well as an opportunity?

If Apple do it, why can't you?

With all the press that Apple has received recently with the iPad and last week the new iPhone 4, it was interesting to read the review of the new iPhone's features by Kyle Baxter of Tightwind.net.

In it, Baxter highlights the new hi-res screen, the camera and – as ever – the overall design. But technology aside, his most significant comment is not the adding of more features but:

“they [Apple] aren’t attempting to compete with Android phones feature-by-feature. Instead, they are trying to continually redefine exactly what a smartphone is, and thus force their competitors to compete on Apple’s terms. They’re trying to make everyone else respond to them, rather than the other way around.”

Metis Partners always stress the importance of “competing on your own terms” as a key strategic objective and by identifying and exploiting your companies intangible assets - brand and reputation, market intelligence, know-how, IP and culture being among the ten areas Metis consider - you can immediately take the upper hand and make competitors respond to you, rather than you to them.

So if Apple with its wealth and position of strength does it, why aren’t you? What hidden assets do you have that can be used as a “weapon” to compete? Where do you have the pistol to beat your competitors bow and arrow?

Thoughts from IPBC 2009

All too often we hear company directors crying out “show me the money” in reference to the wonderful intellectual property they have created. 

 

Quite often its small and medium-sized businesses (‘SMEs’) or university spin-outs who can become pre-occupied with the financial value of their IP. Yet have they missed the point - that value, as with many things in this life, is in the eye of the beholder.

 

Perhaps management would be better focusing on the value of the commercial opportunity which their IP or other intangible assets gives them, potentially in direct sales, licensing opportunities, an accelerated route to market or a real and sustainable competitive barrier to entry.

 

Metis recently attended the Intellectual Property Business Congress in Chicago (‘IPBC’) in the hope of picking up some pearls of wisdom relating to how things are done in the US compared to the UK, and where we and our clients could learn from our counterparts.

 

One point to note is that while big companies talk more about IP assets than intangible assets, they end up blending both together. Admittedly, when big companies talk about IP assets they often really do mean the patents that are at the heart of them, but patent-poor SME focus more on know-how, technical innovation and their investment in R&D.

 

However, while the blend of what constitutes IP may vary, what was refreshing was the agreement that companies need to align their IP with their business strategy. Market intelligence, an asset in its own right, can help with this process. Additionally, IP management itself offers competitive differentiation, potentially providing a company with an agility in the market that helps to protect both market share and margins.

 

While these are all great messages and valuable insights, what didn’t really come across was how companies – big and small - measured or communicated IP value internally. As a result, many companies and executives struggle with IP as a business asset, with board members failing to see the ROI when it comes to IP or intangibles. The focus of budget holders is too often on the protection spend - not on the finances required to effectively exploit the IP.

 

Ultimately, the value of the IP or intangibles is linked to value of the commercial opportunity – something determined by the ability of the IP owner to exploit that value effectively.

 

Perhaps a new start is that budget holders see the IP budget as not just about the cost of IP protection, but also as a budget to be spent on building and executing an IP exploitation strategy – now show me that money!!!